SC to hear JSW-Bhushan Steel case afresh, recalls May 2 judgment for liquidation

A Special Bench of the Supreme Court headed by Chief Justice of India B.R. Gavai on Thursday recalled a May 2 verdict of the court which rejected a resolution plan submitted by JSW Steel for Bhushan Power and Steel Ltd. (BPSL).

The apex court judgment had further ordered the liquidation of BPSL to commence.

However, on Thursday, the Bench decided to hear the case afresh. It was of the prime facie view that the judgment in May, authored by Justice Bela Trivedi (now retired), had not clearly appreciated the legal position in the case.

“Prima facie, we are of the view that the judgment did not correctly consider the legal position laid down in a catena of judgments,” the Bench noted.

It said various factual aspects had to be taken into consideration in the case.

“This is a fit case wherein judgment under review need to be recalled and the matter is to be considered afresh,” the court concluded.

It listed the review petitions for detailed hearing on August 7.

On May 26, the apex court had ordered status quo in the liquidation proceedings before the National Company Law Tribunal. The court had passed the order of status quo on liquidation to give JSW time to file a review petition.

The court had, at the time, said status quo ought to prevail for BPSL in the interest of justice and to avoid future complications.

JSW had argued that the case was complicated, and must not be rushed into liquidation. Senior advocate Neeraj Kishan Kaul, for JSW, had informed the court that BPSL had an annual turnover of ₹28,000 crore in one year. Its production had increased from 2.5 metric tonnes to 4.5 metric tonnes. The firm employed 25,000 people.

On May 2, the Supreme Court had found JSW’s Resolution Plan for BPSL in “flagrant violation and contravention” of the law.

“The Resolution Professional had utterly failed to discharge his statutory duties contemplated under the Insolvency and Bankruptcy Code (IBC) and the Corporate Insolvency Resolution Process (CIRP) Regulations during the course of entire CIR proceedings of the corporate debtor, BPSL,” the Supreme Court had concluded.

The court had invoked its inherent powers under Article 142 of the Constitution to direct the NCLT to initiate liquidation proceedings against the BPSL under the IBC.

The court had faulted the Committee of Creditors (CoC) for accepting the Resolution Plan.

“The CoC had failed to exercise its commercial wisdom while approving the Resolution Plan of the JSW… The CoC had failed to protect the interest of the creditors by taking contradictory stands before this court, and accepting the payments from JSW without any demurrer, and supporting JSW to implement its ill-motivated plan against the interest of the creditors,” the May 2 verdict had observed.

The CoC, represented by Solicitor General Tushar Mehta, too submitted his reservations about the May 2 judgment.